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Tim Draper recommends founders hold ’at least’ two payrolls ‘worth of cash’ in crypto

American venture capital investor Tim Draper warned business founders to prepare for “more and more” bank failures if the government continues to “print money and whipsaw interest rates.“

American venture capital investor and entrepreneur Tim Draper suggested founders keep at least two payrolls worth of cash in Bitcoin (BTC) or alternative cryptocurrencies, along with other diversification recommendations, in response to the uncertainty created by the collapse of Silicon Valley Bank (SVB).

In a March 25 report directed at business founders, Tim Draper stated that Bitcoin is a hedge against a “domino run” on the banks and overbearing government intervention, adding that businesses “can no longer rely” on a single bank or governing body to manage their cash.

Draper suggested that business founders keep at least “6 months of short-term cash” in two separate bank accounts — one with a local bank and another with an international bank.

He noted that businesses should also have at least two payrolls “worth of cash” in Bitcoin and other cryptocurrencies.

These preventative steps were necessary, according to Draper, because for the “first time in many years,” governments are seizing control of banks, and governments themselves are “at risk of becoming insolvent.”

He further revealed that “many startups” sought emergency relief from him after SVB and other banks shut down.

Additionally, Draper emphasized the importance of contingency plans, as boards and management are responsible for meeting payroll deadlines “even in times of crisis.“ He added:

“It is important to build out contingency plans for bank failures that could happen more and more often if the government continues to print money and whipsaw interest rates to counteract inflation caused by the over-printing of money.”

Draper reminded founders to be vigilant against the risk of fraud, noting that fraudsters are skilled at identifying weaknesses in a system and exploiting them.

Furthermore, to prevent phishing theft, he advised founders to verify with all parties involved whenever there is a change in wire instructions or a new approval system.

Related: Silicon Valley Bank’s downfall has many causes, but crypto isn’t one

This comes after recent news that Draper performed a self-composed Bitcoin song after his keynote speech at Paris Blockchain Week 2023 on March 22.

He said the song was dedicated to SVB and “all the banks that have failed and will fail.”

The song received a round of applause from the audience, with Draper concluding his time on stage by saying blockchain, Bitcoin and smart contracts make up one of the “greatest transitions in the history of the world.”

DCG companies have laid off over 500 employees as contagion spreads

Cryptocurrency exchange Luno fired 330 employees on Jan. 25, joining other DCG companies in cutting headcounts.

Hundreds of people have lost their jobs at companies owned by crypto venture capital firm Digital Currency Group (DCG), as the long crypto winter, made colder by the FTX collapse, continues to affect the sector. 

Amid the recent layoffs, London-based cryptocurrency exchange Luno announced on Jan. 25 a reduction of 35% in its workforce, letting go of nearly 330 professionals as a result of turbulence in the tech and crypto industries, which affected the firm’s overall growth and revenue numbers.

Luno was part of DCG’s portfolio, alongside HQ Digital, an asset management subsidiary incubated by DCG since 2020 that managed $3.5 billion in assets as of December 2022. HQ’s operations were shuttered in January 2023, affecting at least 26 employees, according to its LinkedIn profile. In a letter to shareholders on Jan. 10, DCG CEO Barry Silbert noted that “while we still believe in the HQ concept and its outstanding leadership team, the current downturn is not conducive for the near-term sustainability of that business.”

Related: Gemini and Genesis’ legal troubles stand to shake up industry further

The current downturn cited by Silbert also affected DCG employees. The company downsized by nearly 13% at the start of the year, cutting 66 jobs. The crypto conglomerate said it was looking to revamp its finances and promote several senior executives as part of a restructuring process. 

Another 115 jobs were axed by DCG’s Genesis subsidiaries. On Jan. 5, Genesis Global Trading announced it was cutting 30% of its team, or 63 employees, less than six months after disclosing plans to trim 20% of its staff, or 52 employees, in August.

Facing liquidity issues after the FTX collapse, Genesis’ lending entities — Genesis Global Holdco, Genesis Global Capital and Genesis Asia Pacific, collectively known as Genesis Capital — filed for bankruptcy protection on Jan. 19, estimating liabilities of up to $10 billion. Genesis Global Trading and Genesis’ spot and derivatives trading entities remain operational.

DCG’s portfolio also includes digital currency asset manager Grayscale, trading platform Tradeblock, financing and advisory company Foundry, and media outlet Coindesk, which is reportedly considering a sale to strengthen DCG’s balance sheet.

The liquidity crisis at Digital Currency Group has sparked fears of upcoming crypto company crashes and their contagious effects on traditional finance. While the industry was experiencing a bull market in November 2021, DCG’s valuation topped $10 billion with the sale of its shares to SoftBank, Alphabet’s CapitalG, and Ribbit Capital. A year later, the company was seeking to raise $500 to fund its portfolio amid liquidity issues.

“We’ve been aggressively cutting costs over the last few months in reaction to the current state of the market, which has included cutting operating expenses, and regrettably, reducing the DCG workforce,” Silbert explained to DCG’s shareholders.

Frozen bank account triggers switch to Bitcoin salary for a whole year

How a frozen bank account led one Bitcoin advocate to experiment with living on the Bitcoin Standard.

As Bitcoin (BTC) adoption continues to sow seeds around the world, more and more people are choosing to accept the original cryptocurrency as payment for their goods and services. For individuals, that means accepting BTC as their salary.

A Florida-based Bitcoin advocate called SVN (not his real name) took his entire salary in BTC for the past year. Cointelegraph reached out to SVN, who works in the animation industry, to understand why he did it and if there are certain advantages to earning the world’s most recognizable cryptocurrency.

SVN explained that when the bank froze one of his accounts, he turned “to Bitcoin as a solution to keep my life going while the issue got resolved.”

While banks have the power to unbank customers at will or must follow governmental instruction, such as during the Canadian trucker protest in which governmental orders prevented crowdfunding for the protestors–Bitcoin runs 24/7, 365 days a year, without an intermediary. 

But for SVN, he also wanted to explore whether it was possible to live on Bitcoin and crypto and form his own conclusion about its potential as the best form of money. Could Bitcoin really be the future of money? SVN explained:

“Everyone kept saying that it’s the best form of money in the world, but all I knew were hodlers. Had to see for myself and come to my own conclusion.”

Plus, he wanted to “break the stigma and mystery bubbles around this entirely new economy and put a bit of perspective on what things are and what they aren’t.” In essence, by managing his income in Bitcoin as opposed to fiat (government-issued money) income, SVN fell further down the Bitcoin rabbit hole.

He documented the experience in a Twitter thread in which he concluded, “Living on Bitcoin is simple, but challenging.” For example, he mentions that accounting is a nightmare and that tax reporting has become demanding. Furthermore, the experiment has been made more interesting due to Bitcoin’s volatility. The price in fiat terms has dropped over 70% in the last year, meaning his Bitcoin savings have increased as each paycheck came in.

SVN also began writing a newsletter and documented the experience. For example, by using Bitcoin as the primary form of payment, SVN was able to see firsthand how it can be used in everyday transactions. He hopes others seeking to opt out of fiat and opt into Bitcoin will learn from his experience.

Related: NFL star’s massive tax bill highlights problems with BTC salaries

When questioned whether he would accept other cryptocurrencies as well as Bitcoin, SVN responded that his decision-making was driven by concerns about security and sovereignty. The crypto of choice must be robust and resistant to tampering or changes, with a known and active founder and an active CEO or pressure point. In the end, SVN stuck with Bitcoin because it met these criteria and offered simplicity.

Apart from SVN, there is a growing list of high-profile figures who accept their salary, or a portion of their salaries in Bitcoin, such as Belgian members of parliament and NFL stars.